Universal Health Services Stock Plunges After Q1 Results, FY22 Outlook Cut Probability

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  • Universal Health Services, Inc. UHS reported first-quarter revenue growth of 9.3% year-over-year to $3.29 billion, beating the consensus of $3.21 billion.
  • The operating income declined by 21.2% Y/Y to $232.86 million, and the margin contracted by 274 bps to 7.1%.
  • Acute care hospitals owned adjusted admissions increased by 5.7% Y/Y, and adjusted patient days increased by 5.5% Y/Y. Net revenue per adjusted admission increased by 3.1% Y/Y, and net revenue per adjusted patient day increased by 3.3% Y/Y. Net revenues generated from acute care services on the same facility basis increased by 9.7% Y/Y.
  • In behavioral health care facilities on a same facility basis, adjusted admissions decreased by 1.9% Y/Y, and adjusted patient days decreased by 1.3% Y/Y. Net revenue per adjusted admission increased by 5.8% Y/Y, and net revenue per adjusted patient day increased by 5.1% Y/Y. Net revenues generated from behavioral health care services increased by 3.8% Y/Y.
  • Adjusted EPS was $2.15, missing the consensus of $2.46.
  • Adjusted EBITDA was $379.53 million, and the margin was 11.5%, down by 265 bps.
  • Universal Health’s net cash from operating activities for the quarter totaled $445.43 million, compared to $71.95 million in 1Q21.
  • The company repurchased ~2.65 million shares at an aggregate cost of ~$350.2 million (~$132 per share) during the quarter. As of March 31, 2022, the available repurchase authorization is ~$1.41 billion.
  • FY22 Outlook provided in February: UHS expects net revenues of $13.424 billion to $13.694 billion, Adjusted EBITDA net of NCI of ~$1.830 billion to $1.927 billion.
  • It expects an adjusted EPS-diluted of $11.90 to $12.90.
  • While the company is not changing the previous 2022 operating results forecast, it has cautioned about a future outlook cut related to the COVID-19 pandemic, the healthcare staffing shortage, and its unfavorable impact on labor costs.
  • Price Action: UHS shares are trading lower by 11.96% at $122.17 during the post-market session on Monday.
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